M/S Rahul Steels Through Its Authorised Signatory Rahul Gadnhi vs. Union Of INDIA

Held

The Court held that the writ petition is devoid of merit and substance and therefore dismissed. The Court reasoned that the investigation revealed a scheme of circular trading involving multiple firms with a common objective of inflating turnover and availing fake ITC over a period from 2017 to 2022. In such circumstances, a joint assessment of all six involved companies was deemed appropriate under Section 74 of the CGST Act, 2017. The Court found that the matter could not be proceeded with individually. The Court also noted that the diagram illustrating the circular trading in the show-cause notice supported the issuance of a joint notice and the undertaking of joint assessment proceedings. The petitioners could not be singled out from these proceedings by entertaining the writ petition. The Court did not explicitly address the limitation argument or the reliance on the cited judgments in detail, but implicitly rejected the petitioner's contention by upholding the joint assessment and dismissing the petition.

Facts

The petitioners, M/s Rahul Steels and M/s Sagar Steels Suppliers, are challenging the validity of a show-cause notice issued under Sections 74 and 122 of the CGST Act, 2017. The notice alleges that the petitioners were involved in circular trading, availing and passing ineligible Input Tax Credit (ITC) without actual supply of goods. This was discovered during searches conducted under Section 67(2) of the CGST Act. Investigations revealed a scheme involving multiple firms to inflate turnover for bank loans and claim fake ITC. The show-cause notice was issued to six entities, including the petitioners. The petitioners claim the notice was uploaded electronically on March 13, 2024, making it time-barred under Section 74(2) and 74(10) of the CGST Act, as it was allegedly served on September 29, 2023. The revenue contended that the petition is not maintainable as it challenges a show-cause notice, and that Section 160 of the CGST Act prevents assessment proceedings from being declared invalid on certain grounds. They also argued that the notice was served on September 29, 2023, and any delay in uploading was due to technical glitches.

Key Issues

1. Whether the impugned show-cause notice, issued under Section 74 of the CGST Act, 2017, is barred by limitation as per Section 74(2) and 74(10) of the CGST Act, 2017, considering its alleged late electronic upload. - Petitioner's argument: The show-cause notice was uploaded on March 13, 2024, making it beyond the limitation period prescribed for issuance, as it was purportedly served on September 29, 2023. They rely on judgments from the High Courts of Andhra Pradesh, Karnataka, and Orissa, which held that common or joint show-cause notices for multiple assessment years are invalid and separate notices are required. - Revenue's argument: The petition is not maintainable as it challenges a show-cause notice. Section 160 of the CGST Act, 2017, prevents assessment proceedings from being declared invalid on certain grounds. The notice was served on September 29, 2023, and any delay in uploading was due to technical glitches, which should not benefit the petitioners.